Does codetermination affect the composition of variable versus fixed parts of executive compensation?


Dyballa, Katharina ; Kraft, Kornelius


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URL: https://ub-madoc.bib.uni-mannheim.de/39674
URN: urn:nbn:de:bsz:180-madoc-396746
Document Type: Working paper
Year of publication: 2015
The title of a journal, publication series: ZEW Discussion Papers
Volume: 15-053
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: J52 , L20 , G32 , M12 , C33,
Keywords (English): Executive compensation , codetermination , principal-agent theory , corporate governance , Hausman-Taylor
Abstract: Contrary to previous literature we hypothesize that interests of labor may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientated decisions. We compile unique panel data on executive compensation over the periods 2006 to 2011 for 405 listed companies and use a Hausman-Taylor approach to estimate the effect of codetermination on the compensation design. Finally, codetermination has a significantly positive effect on performance-based components of compensation, which supports our hypothesis.

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Dyballa, Katharina ; Kraft, Kornelius (2015) Does codetermination affect the composition of variable versus fixed parts of executive compensation? Open Access ZEW Discussion Papers Mannheim 15-053 [Working paper]
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